On February 5, Governor Mary Fallin (R-Tecumseh) gave her eighth and final "State of the State" address to open the 2018 legislative session. Her address came during a critical moment with respect to the state's long-term fiscal health, including: 1) the ongoing special session to address severe state budget issues; 2) the recurring budget shortfalls and structural issues that have placed continuous pressure on funding core functions of government; and, 3) the domination of the first days of the 2018 legislative session by the 'Step Up Oklahoma Plan', a proposal by prominent Oklahoma business and civic leaders designed to address Oklahoma's challenges and place the state on more stable footing. This proposal, which included a package of around $700 million in targeted revenue increases as well as key budget reforms, sought to solve the ongoing fiscal crisis that threatens our state's future. As an economic development organization working to attract new companies and grow existing ones, the Chamber strongly supported this proposal.

In addition to the ongoing special session of a yet to be determined length, the Legislature will consider more than 1,950 pieces of new legislation during the 2018 regular session. In the Senate, 706 bills were filed as well as 23 joint resolutions. In the House, 1,192 bills were filed along with 32 joint resolutions. In addition, 1,990 measures introduced during the 2017 session remain available for lawmakers to consider this year.

The Chamber is actively engaged in the halls of the State Capitol in a variety of critical areas important to economic development: 1) protecting priority economic development incentive programs utilized to help companies expand and to attract additional companies; 2) seeking an immediate teacher pay increase to ensure that Oklahoma's children have the best education possible; 3) enacting key criminal justice measures designed to lower the state's high incarceration rates that are a burden to taxpayers and families; 4) opposing the irresponsible expansion of gun laws that pose a risk to the rights of business and property owners; 5) opposing discriminatory measures that will result in damage to the state's reputation and lost economic investment; and, 6) protecting transportation funding for critical projects in the OKC-area and across the state.

'Step Up Oklahoma' Proposal Fails to Obtain Supermajority in House of Representatives

The Chamber is disappointed by the failure of HB 1033XX, the $581 million general revenue bill that was the centerpiece of the 'Step Up Oklahoma' compromise proposal developed by some of the state's most prominent business and civic leaders to end the cycle of budget crises that threaten Oklahoma's economic future. HB 1033XX failed on a 63-35 vote in the House of Representatives on Feb. 12. Under the provisions of SQ 640 requiring a three-fourths vote for a tax increase, this measure needed 76 votes to pass. Fifty-three House Republicans and ten House Democrats supported the measure. In the Chamber's view, this was the most important vote for the state's long-term success in at least a decade. The state has a revenue problem and further cuts will only exacerbate the state's challenges and do nothing to raise Oklahoma's poor performance in many critical categories.

The failure of the plan also means a $5,000 teacher pay raise, desperately needed to recruit and retain high quality classroom teachers, will be much more difficult to achieve this session. Legislation containing the raise was contingent on passage of HB 1033XX and teachers will now have to forgo a raise unless other legislative action is taken. Additional revenue measures included in the package will also not advance.

The Chamber believes the 'Step Up Oklahoma' proposal was a decisive opportunity for lawmakers to vote for a compromise package of revenue increases and reforms that probably will not be seen again in the near future. We understood that no single lawmaker would find everything they wanted in the package and some would not like everything it included; however, we were also hopeful the nature of compromise and the ongoing challenges faced by the state would result in enough legislators recognizing the broader importance of taking immediate action to put Oklahoma on a better fiscal path.

House and 'Step Up' leadership have said the vote on HB 1033XX was the final opportunity to raise revenues and put the state on the right fiscal path. House leadership has confirmed the failure of this package will result in budget cuts (on top of previous ones). We are appreciative of those lawmakers who voted in favor of HB 1033XX and also want to thank Speaker McCall, House leadership and Governor Fallin for their strong support of this proposal.

Major provisions of the defeated HB 1033XX included an increase to four percent in the Gross Production Tax, a $1.50 increase in the cigarette tax, a $.06 increase in the gasoline and diesel tax and a $1 megawatt hour tax on electricity generated by wind energy.

We are concerned by measures to scale-back, unfavorably modify or sunset various programs. HB 3225 by Representative Jadine Nollan (R-Sand Springs) seeks to terminate all economic development programs that do not include a termination date as of Dec. 31, 2021, unless the Legislature takes action to extend a specific program beyond that date. In a competitive marketplace, sun-setting programs without first identifying their effectiveness or value to the state will put us at a disadvantage to other states.

The Chamber has been supportive of efforts to bring PEW Charitable Trusts to Oklahoma as well as legislation to implement the review process administered by the Incentive Evaluation Commission. Rather than rush to repeal or curtail key economic development programs, the PEW process provides all economic development programs should first go through a review process to determine the state's return-on-investment. We believe this process should continue.

In addition to protecting the above programs, we are pursuing legislation to extend and improve the Oklahoma Quality Events Act which is set to expire this year. The Oklahoma QEA is designed to help communities across the state attract and retain high-quality, high-economic impact events by allowing them to capture a portion of sales tax revenue generated by hosting an event. The Chamber is supporting a bill by Rep. John Pfeiffer (R-Mulhall) and Senator Gary Stanislawski (R-Tulsa) that will seek to extend the QEA through 2021.

The failure of the 'Step Up Oklahoma' plan makes it much more difficult to identify revenue to provide Oklahoma's teachers with a critically needed pay raise. Currently, Oklahoma ranks 49th in the country in teacher pay. A $5,000 raise would advance the state to 34th. Recruiting and retaining high quality teachers has become a crisis, as many teachers are moving to where they are paid a competitive salary or are leaving the profession entirely.

A number of measures have been filed this session to provide a teacher pay increase and the Chamber believes the Legislature recognizes the severity of this problem. The Chamber will continue to be actively engaged in finding a solution to this problem. However, identifying funds to pay for a $5,000 raise (at an estimated cost of $300 million) will be difficult without the revenue increases proposed by the 'Step Up Oklahoma' proposal.

The Chamber is a strong advocate for legislation and funding for sentencing reforms and rehabilitation programs to ease the financial drain on Oklahoma's criminal justice system, lessen the burden on jails and prisons throughout the state and allow non-violent offenders to enter the workforce more quickly. Estimates show if nothing is done to lower the state's high incarceration rates, Oklahoma will need to build three new prisons at a cost of $1.9 billion over the next decade to house over 7,000 new inmates.

There has been early momentum on criminal justice reform this session. SB 363, a bill first introduced last session by Sen. David Holt (R-OKC) and Rep. Terry O'Donnell (R-Catoosa) would provide special district court judges clear authority to sign pre-trial release orders. SB 363 passed the House of Representatives by a vote of 87-0 on Feb. 13 and will now return to the Senate.

HB 2281 by Rep. Terry O'Donnell (R-Catoosa) and Sen. Greg Treat (R-Oklahoma City) lowers the penalties and fines associated with various property crimes. The CCR to HB 2281 passed the full House of Representatives by a vote of 67-17 on Feb. 6 and will now be sent to the Senate. The Chamber will continue to pursue common sense criminal justice reform this session.

The Chamber has been asked again this session to lead a broad-based coalition of roughly 45 businesses, associations, universities and law enforcement groups called 'Oklahomans for Business and Property Owners' Rights' that was established to oppose legislation that would irresponsibly expand gun rights. In 2017, the coalition was able to prevent the passage of all gun expansion legislation that would have taken away rights of business and property owners rights or jeopardize public safety.

During the 2018 session, an estimated 83 guns bills (some of these measures were carried over from 2017) will be considered by Oklahoma lawmakers. A number of these bills would imperil economic development efforts by allowing guns into venues such as sporting arenas, businesses, campuses and churches. While supporting responsible expansion of the 2nd amendment, the Chamber and its partners believe that guns do not belong in every environment and that associations such as the NCAA, Big XII and horse shows will move events to locations where guns can be prohibited.

The Chamber and the coalition will continue to work with lawmakers, and also gun rights advocates, to ensure that common-sense legislation is pursued rather than anti-business gun measures.

Over the past several sessions, the Chamber actively engaged with partners to defeat discriminatory legislation that would have resulted in significant economic damage to Oklahoma's convention/tourism sectors as well as its ability to host high economic impact events. Oklahoma only has to look at North Carolina and Indiana as states that have taken the wrong path and paid a high economic price as a result.

A number of troubling measures have been introduced this session such as SB 1250 by Senator Josh Brecheen (R-Coalgate) the "Protecting Freedom of Conscience from Government Discrimination Act". Under this bill, individuals and religious organization would be allowed to refuse to serve or hire individuals with whom the individual or organization has religious or moral objections, such as same-sex couples or transgendered persons. In addition, HB 2680 by Representative Chuck Strohm (R-Jenks), the "Bathroom Guidelines Act" targets the transgender community.

The Chamber will oppose these measures and all others that promote discrimination and invite economic pain at a time when Oklahoma can least afford it.

The Chamber has worked with legislators, the Oklahoma Department of Transportation, the City of Oklahoma City, the Chickasaw Nation, the Association of Central Oklahoma Governments, the Ardmore Chamber and others to protect the state's investment in the Heartland Flyer passenger rail service that travels from Oklahoma City to Fort Worth, Texas (the train is operated in financial partnership with the Texas Department of Transportation). The existence of passenger rail has led to major investments by the City of Oklahoma City ($30 million) in a downtown intermodal hub and is the foundation for plans to construct a commuter rail system in central Oklahoma.

Additionally, plans are underway to extend the Heartland Flyer's service to Newton, KS which would connect Oklahoma with Kansas City, St. Louis, Chicago and Amtrak's national network. The Chamber is concerned with legislation (SB 1239) by Senator Nathan Dahm (R-Broken Arrow) that seeks to cut $2.85 million in funding from the Heartland Flyer. Essentially, this would eliminate the State of Oklahoma's entire share of the Heartland Flyer and terminate passenger rail service in the state. The Chamber will actively work with our partners to defeat SB 1239.

The Chamber will also continue to work closely with the Oklahoma Department of Transportation to protect adequate funding for the eight-year construction work plan, which continues to include a number of key OKC-area projects (I-235/I-44; I-35/1-240); SH 77). The reduction and delays in projects within the current plan caused by budget cuts must cease if Oklahoma is to have a quality infrastructure system.

Members of the Chamber's Executive Committee held separate Government Relations Roundtable Series meetings with Governor Mary Fallin (R-Tecumseh) and Speaker of the House Charles McCall (R-Atoka). These meetings are designed to allow the Chamber and top state officials to engage in dialogue on our legislative priorities. Topics discussed included: 1) 'Step-Up Oklahoma'; 2) Economic Development Incentives; 3) Criminal Justice Reform; 4) Health Care Funding; and, 5) Transportation Funding.